Birmingham best UK city for investment prospects, says report

Birmingham has been ranked the top UK city for land and property investment prospects and the sixth best in Europe.

The arrival of the HS2 high speed rail line and substantial infrastructure investment around the project makes Birmingham a prime target for inward investors, beating even London, according to a survey by the Urban Land Institute and PwC.

London has slipped from the top ten, suggesting that investors are seeing better short term growth prospects in regional UK and European cities, where rents and land values are generally cheaper. The report notes:

The strong ranking of Birmingham reflects the positive view expressed during the interviews on property investment in UK regional cities, including Manchester.

Birmingham, which is set to benefit from substantial infrastructure investment, in particular the HS2 high-speed rail line to London scheduled to open in 2026, reflects a trend seen in a number of European regional centres by offering good value for investors.

Birmingham has clearly created an environment that international investors are taking note of. Our new infrastructure – including a modern train station, tram lines and a future HS2 terminal – place the city at the heart of Europe’s business networks.

Investors are taking Birmingham seriously because it also offers an outstanding quality of life, ranging from metropolitan city living to its green spaces and exemplary education provision.

We are working with a growing number of firms based in London, which are seeking to expand outside the capital and understand that Birmingham provides the best environment for their business to grow and where their staff can thrive.

The need for space in the city, from both companies and their workers, is creating significant levels of demand for office and residential space – meaning that the number and scale of investment opportunities in Birmingham are on the rise.

Meanwhile, Birmingham Airport yesterday reported annual passenger numbers in excess of ten million for the first time. Records were also set for its busiest month ever in August and for the busiest day ever on 28th August 2015. Airport boss, and Marketing Birmingham chairman, Paul Kehoe also pointed to brand new services launched to Reykjavik, New York, Madrid, Warsaw, Budapest and Poznan and additional frequencies added to key hubs such as Dubai, Istanbul and Delhi as evidence of the strengthening regional economy.

The ULI/PwC study noted that the “rapidly changing demands of occupiers and the disruptive forces of technology, demographics, social change, and rapid urbanisation” are dominating the European real estate chain.

Investors are focusing on cities and assets rather than countries and are particularly interested in sectors such as healthcare, hotels, student accommodation and data centres.

The high street retail and logistics sectors, which have benefited from technological advances and improving economic conditions, are also predicted to fare well in 2016.

More progressive developers and investors are innovating in an attempt to meet the needs of increasingly informed and demanding occupiers. The property developers, investors and operators leading the pack are paying more attention to the role the physical workplace plays in talent management and workplace productivity.

ULI Europe CEO Lisette van Doorn said:

Investors are getting more creative in trying to access future prime assets at reasonable prices through more focus on alternatives and development.”

They take more risk on the short term to fulfil their long term objective for core assets. At the same time, more and more players in the real estate industry are starting to address the needs of occupiers, who are seeking harmony between their workplaces and their lifestyle needs.

Some of the industry’s biggest challenges right now are how to become less about brick and mortar and more about service and the implications this may have for the traditional business models of real estate operators.